giants XM and Sirius have reached an agreement to merge in an all stock deal,
it was announced today (Feb. 19). The
new company, which does not yet have a name, will be worth $13 billion including
debt of almost $1.6 billion dollars. XM shareholders will receive 4.6 shares of
Sirius common stock for each share of XM they own. Rappers
like Eminem, Grandmaster Flash, 50 Cent and DJ Premier have channels or shows
on Sirius, while XM has deals with rappers like Ludacris, Snoop Dogg, Talib Kweli,
Trick Daddy, Jermaine Dupri and others.Under
the new deal, XM and Sirius shareholders will each own approximately half of the
combined company, which will be headed by Sirius’ current CEO, Mel Karmazin. "This
combination is the next logical step in the evolution of audio entertainment,"
said Karmazin, CEO of Sirius Satellite Radio. "Together, our best-in-class
management team and programming content will create unprecedented choice for consumers,
while creating long-term value for shareholders of both companies. The combined
company will be positioned to capitalize on Sirius’ and XM’s complementary distribution
and licensing agreements to enhance availability of satellite radios, offer expanded
content to subscribers, drive increased advertising revenue and reduce expenses."
Sirius will continue to operate independently until the transaction is complete.
Both companies will decide the new company’s name and primary business location.
merger still faces antitrust scrutiny from the Department of Justice. Also,
a clause in the FCC laws state that one satellite radio operator cannot own the
other is expected to be a hurdle.Analysts
say the proposed merger has a 50/50 chance of passing and that the merger is likely
to be opposed by the National Association of Broadcasters. If
approved, the companies expect the transaction to be completed by the end of 2007.